As a stock marekt beginner you will hear the two terms very commonly and these are Class A and Class B shares.

The class of shares in fact tells you how much and what kind of voting right do you have and that in turn will determine the way you will be able have your opinion heard at the annual general meeting of the board.

I will be discussing common stock first and this stock is the one which will be issues to all shareholders and this type or class of stock carries maximum risk. In fact in the event of the liquidation of the company it is this stock which will be given least preference and will be given whatever is left off the company once everyone else has been paid off.

But as a general stock market investor these comon shares are the ones which will generally appreciate more than anything else and that is where the higher risk pays off.

Now if we compare common stock with the preferred stock the difference lies in the fact that the preferred share holders have claim on the earnings and assets before the common share holders and in the event of the bankruptcy preferred stock holders will be paid off after the creditors have been paid. The preferred share holders generally do not have any voting rights but yes they do have a certain amount of fixed dividend that is paid to them.

There are types of classes that you will also encounter in the stock market usually Class A and Class B shares. The Class A shares typically will have ten or five votes per share and the Class B shares will have one vote per share. The classification of shares as Class A or Class B can be exactly the opposite for some companies as the companies try to cloak the kind of voting power certain types shares hold. The need for the classification occurs because companies try to provide more voting power to certain section of investors.

Make sure to read the companies charter,bylaws and prospectus before investing as a careful investor is likely to make more money than a casual investor.